How to Make Sure That Your Family Business Survives and Thrives
Posted by: Dr. Marc R. Dussault in Business, tags: BusinessIt is easy to think that business success is due primarily to such factors as effective marketing and careful planning. However, one of the most important factors to look at in determining your company’s success is the ‘family business’ factor. It is essential to understand the dynamics of a family business so you can best utilize the strengths of them and also secure yourself from any of the challenges that may arise and threaten the stability of the organization.
In fact it is estimated that 70% of the family run businesses that fail (the average life expectancy for family owned firms is 24 years) fail because the owner/manager did not understand the dynamics of running a family business.
The first question to ask is what is a family owned business? There is much debate about this issue; however for the purposes of this article a family business is one that has a majority share owned by one family (over 51%).
Given the amount of conflict that exists within families, is it any surprise that companies that are family businesses allow some of that conflict to affect the company? This is a perfectly natural thing to happen and it is important to plan processes and systems for dealing with this before it happens, rather than wait till emotions are heated and tempers have flared.
One of the key areas that family businesses need to look at is succession planning. This is an area that if you ‘fail to plan you plan to fail’. The best strategy is to create a process for it before any challenges arise so that you can ensure that family business has a smooth transition between generations.
Another key aspect to look at is strategy formulation. Strategy, of course, is important for any business and it is vital not let any family ‘politics’ get in the way of creating and implementing the right plan for your company’s growth.
Business survival can be challenging and it can be even more challenging if there are family conflicts in place. To ensure the survival of your family business you need to make sure that you are dealing with potential issues proactively through putting in place processes and guidelines rather than waiting till challenges arise.
Obviously the level of interconnectedness and involvement of your family (or your company owner’s family) will determine the degree of importance this subject may have for you personally. However my assertion is that these are issues that all family businesses need to contend with.
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